When a Rapper Gets a Million Dollar Record Deal, They Are One Million Dollars Richer

To this day, many rap fans think a millon-dollar-deal is some kind of lotto ticket; this couldn't be further from the truth. Record deals are loans. And the price tag on a deal shows the level of the label's potential investment, and certainly not the artist's cash in pocket. Even back in 2000, Wendy Day's Rap Coalition broke down why, exactly, artists don't make money from record deals.

Things haven't really changed. But take a look at the biggest ticket example in recent times: Chief Keef's $6 million deal with Interscope, which is one of the more generous in recent times; it was negotiated by Theo Sedlmayr, the same attorney who represents Eminem and 50 Cent. Keef's advance was $440,000, contained in a blocked trust—meaning the rapper could only access it once he turns 18. Keef also received $300,000 to cover the cost of recording his debut. He and the other partners in GBE received advances to run the label. He also received an advance to cover overhead expenses.

All of these advances need to be repaid, through sales of his album. And even then, there are set sales requirements for him to receive the full amount of the $6 million dollar deal—starting with the expectation that his debut sell 250,000 by the end of the year in order for the label to even release more albums from the rapper (in order to recoup the rest of their money).

All the money invested in Keef needs to be repaid. The real payday for him won't come until after he's earned Interscope the money they spend on him.

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